EX: Pound To Euro & Pound To Dollar Exchange Rates Gain As GBP Sterling Finds Buying Support
The Pound Sterling (currency:GBP) continued to find solid buying support on Wednesday; the Pound Dollar exchange rate pushed back above 1.67 GBP/USD, while the Pound Euro exchange rate traded up towards 1.2170 GBP/EUR. The UK services sector data was close to market expectations with a reading of 58.2 for February, from 58.3 the previous month, maintaining the recent trend of slight deceleration in business surveys. The data overall this week will maintain expectations of a modest loss of momentum in the UK economy, but there is still likely to be solid first quarter growth. The Pound largely shrugged off the data and maintained the recent upward trend against the vast majority of the 16 most actively traded currencies. The Bank of England monthly announcement takes centre stage again today but there is little chance of a statement given the recent revisions to forward guidance and the impact in the market is likely to be very limited.
In the Euro-zone, the latest PMI services sector data was slightly stronger-than-expected with a final February reading of 52.6 from a flash estimate of 51.7. Overall improvement was dampened by another disappointing performance in France. The EU Commission warned that France would not meet budget targets without further action, while there were also warnings over the Italian outlook. The U.S ADP employment data was weaker-than-expected with an increase in private sector jobs of 139,000 for February. There was also a sharp downward revision to January’s figure to 127,000, from 175,000 previously. The latest ISN non-manufacturing data posted a significant decline to 51.6, fro, 54 previously.
A sharp drop in the employment component of the report caused a sense of unease. The data released yesterday certainly provided little support to the Dollar with a downward revision to Friday’s non-farm payrolls data also likely to have a negative impact. There will be an element of caution today ahead of the ECB interest rate announcement and press conference. There was speculation that the central bank would end sterilization of SMP bond purchases, which would serve to boost liquidity.
